The SEC and Small Investors

The SEC adopted a regulation known as the trade-through rule that would ensure that brokers get the best price for customers buying stocks, even if it means going to another stock exchange:

Order Protection Rule

Rule 611 would require trading centers to obtain the best price for investors when such price is represented by automated quotations that are immediately accessible.

Specifically, the rule would require trading centers to establish, maintain, and enforce written policies and procedures that are reasonably designed to prevent trade-throughs, and, if relying on one of the rule's exceptions, which are reasonably designed to assure compliance with the exception.

The rule would protect the best bids and offers of each exchange, Nasdaq, and the NASD's ADF.

The rule does not contain a general "opt-out" exception that would have allowed market participants to disregard displayed quotations. The elimination of any protection for manual quotations is the principal reason that this broad exception is not included in the rule being considered for adoption.

The trade-thorough rule, considered a win for small investors, was adopted by a 3-2 vote, with the Commission's two Democrats siding with Republican Chairman William Donaldson.